What a shame when your sister thought she was doing something nice for you. I'm one of those who couldn't just throw it away .
There was a quilt shop just north of Brisbane that went under in the floods. They asked their regular customers to take a bolt home and wash it. It was then sold at a reduced price. Flood waters can have all manner of things.
If you should decide to try a rescue bid, add some Oil of Cloves to the water or better still spray the fabric before you wash it. In a spray bottle you only need 3 drops and it will kill all mold. This has been tried and tested (not by me) and proved that it works.
If you still didn't want to use it perhaps you could donate it to a charity but let them know what has happened.